Saturday, February 18, 2012

Abstract: What determines success on Wall Street? This study examined if genes affecting dopamine levels of professional traders were associated with their career tenure. Sixty professional Wall Street traders were genotyped and compared to a control group who did not trade stocks. We found that distinct alleles of the dopamine receptor 4 promoter (DRD4P) and catecholamine-O-methyltransferase (COMT) that affect synaptic dopamine were predominant in traders. These alleles are associated with moderate, rather than very high or very low, levels of synaptic dopamine. The activity of these alleles correlated positively with years spent trading stocks on Wall Street. Differences in personality and trading behavior were also correlated with allelic variants. This evidence suggests there may be a genetic basis for the traits that make one a successful trader.

Duke has some admittedly questionable rules on suppressing free expression. But by and large we do pretty well. (I would credit our Provost, Peter Lange. He has very solid common sense on what a university is supposed to be, and he actually likes the idea of free expression and due process. May other universities have such academic officials, 'cause there aren't enough like Dr. Lange. If you have forgotten, check this video, starting at about 1:05. Peter faced a mob, alone.).

UNC on the other hand.... Well, UNC sucks. I say that as a UNC fan, as someone whose older son (the EYM) is graduating from UNC. UNC, stop it. What are you afraid of?

In my seminar on Growth & Development today we discussed a paper where the sample size was fairly small, around 75 observations. The authors said due to the small sample size, they couldn't estimate models with a lot of regressors in them because of degrees of freedom issues.

Then they proceeded to investigate upwards of 30 variables, by using them one at a time! To "save" degrees of freedom!

Yikes!

First off, excluding relevant variables in the analysis biases results unless the variables are somehow orthogonal to each other, which is EXTREMELY unlikely.

Second, estimating 30 small regressions on the same sample does not actually save ANY degrees of freedom over estimating one big regression on the sample.

Sure you can say it does and use the nominal critical values in each case, but you are kidding yourself and misleading your readers.

Degrees of freedom are like cigarettes. Once you use them, they are gone. They can't be re-used over and over again.

Overall the paper reported well over 100 estimated coefficients. On 75 data points. In a ton of different regressions all with the same dependent variable. Used the nominal critical values in every case.

What is the critical value for a "t-stat" with negative 34 degrees of freedom?

Frau Merkel has announced that Germany is going to phase out nuclear power, simply because of the Japanese tsunami. Well, that is like basing water-collection policies in Rhineland-Westphalia on the monsoon cycle of Borneo. As I was saying last week, the Germans have a powerfully emotional attachment to everything that is "green", and an energy policy based on renewables will usually win German hearts. But it will not protect the owners of those hearts from frostbite and death due to exposure, for wind can often be not so much a Renewable as an Unusable, and also an Unpredictable, an Unstorable, and -- normally when it's very cold -- an Unmovable.

Their diagnosis makes sense: government uses force to pay off corporations. Their prescription, however, is bizarre: much more of the disease. I don't get it. The state is violence, force, and the misuse of power. Sometimes there's no other way. But in general we want less, not more.

There is even a video, for the Daily Kos folks, with your gnat-length attention spans.

But perhaps this explanation is better. (Do click for a more democratic image)

Democracy without rule of law is simple tyranny. You bed-wetters all claim to hate capital punishment. Me, too. It's state murder. Why do we have it? Majority rule. Why would you expect rectitude in the bloodthirsty multitude? Majority is not morality, it's just what most people happen to think.

First off, it's based on an accounting identity! God I love the government:

Qnfb = ALaK1-a

(this is my crudely typed version of equation 3 in the CBO document)

Sadly they forgot the third bar in the equal sign. This is an accounting identity! A is TFP which is defined as what's left over in output after we impute the effects of labor and capital (the CBO freely admits this by the way). a is assumed to be 0.30 and constant over time.

Potential labor and potential TFP are forecasted by piecewise linear regressions where the breakpoints ARE NOT DETERMINED BY ANY SORT OF STATISTICAL CRITERION (again, read the document if you doubt me).

The CBO method is arbitrary and weak. Defending it via appeal to authority by saying "it's based on the Solow model" is pathetic.

Second, the measure of potential output is crucially dependent on all the forecasting assumptions used to produce potential Labor and potential TFP, which are not based on any real economic theory or optimal statistical algorithm.

Finally, the CBO itself says things that are remarkably Bullard-like right in the document Duy links to:

"CBO's framework explicitly models the factors that determine the accumulation of capital, so the projection for the capital stock is fully consistent with CBO's projections for private saving and the federal budget. Specifically, a higher projected rate of saving will lead to faster accumulation of capital and faster growth of potential output. Therefore, a higher projected federal surplus, which generally raises

the rate of national saving, will speed up the growth of the capital stock and potential output in the model. Conversely, a recession or other event that depresses the saving rate will temporarily slow the accumulation of capital and the growth of potential output."

That's right, according to the CBO, federal deficits lower the path of potential output! It must be true, after all, it's based on the Solow model.

Monday, February 13, 2012

In at least one instance, a poll worker appeared to be unable to distinguish between even and odd numbers. (Hr’g Tr. (Hampton) 2-202 to 2-205.) When asked whether the house number 798 was even or odd, the poll worker responded:
A. Odd.
Q. And why do you think that’s odd? I’m sorry. Why do you think her address is an odd address?

A. Because it begins with an odd number.

Q. It starts with an odd number?

A. Yes. Nine is an odd number. Eight’s even.
. . .
Q. . . . So on Election Day, if somebody came in with an address 798 and you had two ranges to choose from, you would choose the odd for them?

A. Yes.

Q. Okay. And is that how you did it for all the ballots that you looked up on Election Day?
A. To determine if they were even – yes.Q. To determine if they were even or odd, you looked at the first digit of the address?

A. No. I looked at the whole address.

Q. And you chose however many – if there were more odds than even numbers, it would be an odd address?
A. Yes.

Me and LeBron's Grantland article has stirred up the pot at least a little bit. I was on Cleveland sports talk radio (92.3 "The Fan") where the host told me that America has become "a nation of wussies". Tyler briefly acquired a Twitter Stalker!

One of the best statements I've read, post-article, comes from the comments on Florio's rant:

"the data shows that younger players are more at risk because their brains are developing and even though the velocity of a NFL type hit does not exist, it doesn’t take nearly as much to cause damage. It’s actually the repetitive nature during the younger years that leaves these guys so exposed. Most play from 5 y/o on to 30….25 years of straight head knocking. The lawsuits will come from a parent of a deceased or severely injured kids whose coaches wouldn’t listen to the law. Or knuckle head parents who say it didn’t kill me so it should be ok for my kid….then boom brain injury. I believe we are looking at the pinnacle of the sport. Federal, State, and local laws will become stricter, and rightfully so. You don’t need a non-neurologist on the side of a Pee Wee football game saying, ah he just had his bell rung. Insurance premiums for football is already pricey, wait till a few lawsuits make it through."

Strange conclusions will be drawn from this article, I predict. People on the left will say, "See? Everybody gets benefits from government. They are hypocrites."

Well, wrong. If a thief takes my stuff, and then offers a small amount of it back to me, this article would imply that I should be charged with knowingly receiving stolen goods. It matters it was taken from ME. Trying to get back some of the huge amount of money I pay in doesn't make me a hypocrite.

I would say, once you establish the budget as a giant commons, then it makes sense for each person to try to take as much as possible. It's a Ponzi scheme, of course, since we are depending on other people, people now too young to vote, to put the money back. The problem with this Ponzi scheme is that it is MANDATORY. You have to put money into it, because of taxes. Your only choice is whether to try to get some of that back, in the form of entitlements. The fact that I take some of the money back is NOT a sign that I approve of the Ponzi scheme. I'd bail if I could. Keep your entitlements, and I'll keep my taxes. And let's not make the YYM and the EYM responsible for paying off that deficit.

You can't have a system where everyone takes out more in benefits than they put in in taxes. Unless you want to get all covered in Greece.

5 years after I (with the help and encouragement of Mrs. A) built our headboard and end tables, I finally finished our bedroom set by doing the bench for the end of the bed just last week. You can clic the pics for more glorious images

Here's a close-up of the bench. All construction is just mortise & tenon with glue and a few wooden dowels for pins. No nails, screws, chewing gum.....

End table detail. The wood is mango from Hawaii and bocote from Mexico. The mango has a lot of curl in it:

Putting the headboard pieces all together simultaneously was a real challenge:

The legs for the bench were tricky to do, the stretcher is used as a through-tenon. I have to thank my friend and colleague Lex Holmes for his help and advice on this project.

I finally came out and told her this today, partly because it was too funny NOT to share.

When my daughter made her post, she used Facebook's privacy settings to block "Family" and "Church" friend's lists. All her other friends could see it. We, of course could not.

One of our dogs is always getting in photos and therefore has her own Facebook pa...ge. It's just a cute dumb thing we did for fun. Well, the dog's profile is rarely used except when funny pictures of her are posted. Since that's not too often, and she has very few friends on Facebook, her wall is kind of bare, with relatively few posts showing up on it.

The other night we gave the dog a bath and there was a funny photo we uploaded to Facebook and tagged her in. I logged in as the dog the next morning to comment on the photo. However when I logged into the dog's profile, my daughter had forgotten to add her to the "family" list.... so our family dog's profile showed her post right there on the front page.

It wasn't any parent-hacking, computer spying, or monitoring of any kind.. the dog actually ratted her out completely by accident. She hasn't petted that dog all day today...

Sunday, February 12, 2012

World Peace had some sage advice for Jeremy Lin in advance of the Knicks beat-down of the Lakers on Friday night:

Q: Did the Lakers talk about him in the locker room?

A: Do we talk about him? Yeah, we talk about him. We think he needs a better haircut. I don’t like that style. You’re in New York, the fashion capital. Change your haircut, OK? You’re a star now. Wear some shades. Shades, OK? Put down the nerdy Harvard book glasses. Put on some black shades, OK? With some leather pants. Change your style. Fashion.

Q: Do you wear leather pants?

A: No, I won’t wear them, but he should wear leather pants. He’s the type of guy who should wear leather pants, some nice shoes and change his fashion. You’re Jeremy Lin, for godsakes. You know what I’m saying? You know? Put down that law book, stop reading the New York Times and start reading the Daily News. Newsday, that’s the one. I like that one because there’s always color in that one. What else? Wall Street Journal. Get some swag. You’re in New York City. Put your hat to the back, too. Put your hat on backwards. Come to practice with your pants sagging and just tell them, 'I don’t feel like practicing.' Practice? You know? Practice? And wear an Iverson jersey. You know? Come to practice with a cigar. Lit. 'I’m Jeremy Lin.' You know? He should change. We're all excited to play tonight. It’s like the first time for everybody. Everybody’s excited. Kobe’s excited. He wants to get 50. He wants to welcome Jeremy Lin to his new level."